Would it surprise you to know that 40% of Americans don’t have enough savings to cover a $400 emergency? It’s true, according to the Federal Reserve. Equally true is the link between your financial and mental well-being. May is National Mental Health Awareness Month, and we have some tips to help you reduce your money stress and improve your overall happiness.
How Money Causes Stress
Unexpected moments can cause financial strain that leads to physical and mental stress. Whether it’s a car repair, leaky roof, or your refrigerator unexpectedly stops working, the money to pay an unexpected bill must come from somewhere.
Having emergency savings set aside can minimize your stress. However, if you need to use a credit card to move the expense further down the month or make payments over time, that can increase your stress. How those bills and financial obligations affect you is often called your financial well-being, which directly affects your mental and even physical well-being.
According to a 2021 report from Pew Research Center, there is a clear link between mental health and financial health. Money stress can lead to chronic psychological distress and can eventually affect your physical health over time. This can lead to unhealthy and often costly coping mechanisms such as overeating, alcohol or drug abuse, or smoking. Thankfully, financial education as well as thoughtful planning can help you improve your financial and mental well-being.
- Build your emergency savings.
Building an emergency savings account is one of the foundational ways to avoid stress from unexpected expenses. Put away $8 a week, and in one year, you can feel confident knowing you have $416 on hand to deal with what comes your way.
- Use your membership benefits.
Did you know that financial counseling is free with your Clearwater membership? Our certified financial counselors can help you build a budget, assess your spending habits, create a debt reduction plan, and help you plan ahead for a stronger financial future. Learn more.
- Cut expenses.
This is easier said than done, but cutting expenses is another fundamental way to avoid added stress. Here’s an experiment to try. For one week, avoid buying anything but 100% necessities. Eliminate eating out, trips to the convenience store, hobby supplies, etc. At the end of the week, total how much money you saved. Then reallocate some or all those dollars towards building your emergency savings balance.
- Talk through every purchase.
Before buying anything besides groceries and paying your bills, ask yourself if what you are about to buy is absolutely necessary. If the answer is no, then put that money into savings to build your financial confidence and resiliency.
Find Financial Wellness at Clearwater Credit Union.
Financial stress gets to everyone now and then. As your credit union, we can help. We offer free financial counseling, as well as free financial literacy courses on subjects like basic banking, budgeting, and credit. Plus, we can help you avoid predatory payday lenders and give you a fresh start with a consolidation loan or access to much-needed funds.
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